H.R.2912 - Oligarch Act of 2025 (119th Congress)
Summary
H.R.2912, the Oligarch Act of 2025, proposes to amend the Internal Revenue Code of 1986 by establishing a wealth tax on the net value of taxable assets for applicable taxpayers, including individuals and trusts. The bill outlines the computation of the tax, applicable taxpayer definitions, threshold amounts, and special rules for trusts, deceased individuals, non-residents, and covered expatriates. It also includes provisions for information reporting, enforcement, and penalties for understatements.
Expected Effects
If enacted, this bill would create a new wealth tax system in the United States, impacting high-net-worth individuals and trusts. It would require the IRS to develop new valuation rules and audit processes, potentially leading to increased tax revenue and changes in wealth distribution. The bill also aims to address tax avoidance strategies related to trusts and gifts.
Potential Benefits
- Potential increase in government revenue, which could be used to fund public services or reduce the national debt.
- Could lead to greater wealth redistribution, potentially reducing income inequality.
- May incentivize investment in productive assets rather than hoarding wealth.
- Could discourage the use of complex trust structures for tax avoidance.
- The bill mandates annual audits of at least 30% of taxpayers subject to the wealth tax, which could enhance tax compliance.
Most Benefited Areas:
Potential Disadvantages
- Potential for capital flight as wealthy individuals and businesses move assets out of the country.
- Increased complexity in tax compliance and administration, leading to higher costs for both taxpayers and the IRS.
- Possible disincentive for wealth creation and investment.
- Valuation challenges for assets that are not publicly traded or have readily ascertainable values.
- Could face legal challenges based on constitutional arguments regarding direct taxation.
Constitutional Alignment
The constitutionality of a wealth tax has been debated. Article I, Section 8 grants Congress the power to lay and collect taxes, but Article I, Section 9 states that direct taxes must be apportioned among the states based on population. The Sixteenth Amendment allows Congress to tax income without apportionment, but whether a wealth tax qualifies as an income tax is a matter of legal interpretation. The bill's impact on individual liberties and due process under the Fifth Amendment could also be subject to scrutiny.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).